Senate panel approves union-backed pension package

SPRINGFIELD-A union-backed, pension-reform package described by Senate President John Cullerton as the most constitutional way to solve Illinois' pension crisis passed a Senate panel Wednesday despite objections from Republicans and retired teachers.

The Cullerton-crafted plan advanced from the Senate Executive Committee by a 10-5, party-line roll call and now is positioned for a full Senate vote as early as Thursday.

"This model is one that's constitutional," Cullerton told the panel.

At its core, the plan gives existing government workers and downstate and suburban teachers and retirees different options that, in varying degrees, involve voluntarily giving up or delaying annual, compounding 3-percent cost-of-living increases in retirement in exchange for continued access to state-subsidized health care.

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Cullerton said the plan would eliminate about $11.5 billion of the state's nearly $100 billion unfunded pension debt. Passing the plan, he said, would free up as much as $850 million in 2015 that otherwise would be dedicated to pension payments.

The measure would provide less in savings that a plan crafted by House Speaker Michael J. Madigan (D-Chicago) that passed the House last week. Madigan's plan, which would wipe away about $30 billion of the nearly $100 billion pension hole, recalibrated the formula for the post-retirement COLAs so they no longer compound. It awaits Senate action.

The largest public-sector unions, which called Madigan's plan unconstitutional and vowed a legal challenge, hailed the Senate plan Wednesday and signaled they wouldn't go to court to block it.

"We cannot ignore the Illinois Constitution," said Michael Carrigan, president of the Illinois AFL-CIO. "The Constitution mandates our public pension benefits cannot be diminished or impaired. We believe this legislation in its present form represents a fair, responsible and constitutional solution to the public pension problem."

While the Illinois Education Association and Illinois Federation of Teachers also sang the measure's praises, a coalition of 35,000 retired teachers threatened to challenge Cullerton's plan in court if it passed the Legislature and was signed into law by Gov. Pat Quinn.

Under Cullerton's measure, existing retirees would have to make one of two choices.

They can keep their compounding cost-of-living increase and state health care but agree to a two-year freeze in the cost-of-living increase. Or, they can keep the compounding cost-of-living increase and give up state health care entirely.

"It's our opinion a choice that's kind of like 'jump off a cliff' or 'I'll shoot you' is not a very good choice," said Bob Pinkerton, vice president of the Illinois Retired Teachers Association, who said his group has about $100,000 socked away to wage a legal battle against the Senate plan.

State Sen. Matt Murphy (R-Palatine), who voted against Cullerton's plan, raised doubts about whether it truly would solve the state's pension problems or merely set up a scenario where lawmakers have to revisit the issue in a few years.

Murphy voiced support for the House-backed plan, which Quinn has endorsed. The governor has been silent about the Cullerton plan that emerged Monday.

"Unfortunately, there's a little bit of a Groundhog Day component to this," Murphy said. "I just don't think this solves the problem or saves the money, and it invites us to be back here far too soon to face this again."

The plan that advanced in the Senate coincides with possible movement on another pension issue in the House, where Madigan has scheduled a hearing Thursday to craft legislation to make downstate and suburban school districts shoulder the state's cost of funding pensions for educators in their school systems.

The idea to end what Madigan has derided as a "free lunch" for those districts has faced resistance from Republicans and suburban and Downstate Democrats, who worry the pension cost shift from the state could result in higher property taxes.

On Wednesday, Madigan predicted that his chamber will "get the job done" on the cost shift.

Since Cullerton's plan can be tweaked in the House, there is potential it could merely be a poison pill that could be added as an amendment to help quash the Senate president's plan in Madigan's chamber. A defeat like that would leave the Madigan pension-reform version as the only game in town as a scheduled May 31 legislative adjournment looms.

Asked if he intended to move the cost shift as its own piece of legislation or tack it on an existing bill like the Cullerton one, Madigan told the Chicago Sun-Times, "We'll get to that later."